Eye Opener: Workers Get Say on High Health Costs

By
Ed O'Keefe

Lawmakers will consider whether promotional brochures like the one above misled current and former federal employees into thinking their long-term care premiums would not increase. (Courtesy Senate Special Committee on Aging)

Happy Wednesday! (And Happy Birthday to Mrs. Eye!)

Current and former federal employees angered by premium increases in the Federal Long Term Care Insurance Program will get their day before Congress on Wednesday, when senators hope to get answers about why the impending price jump is warranted and what the government did to inform participants.

As The Eye reports in Wednesday's Federal Diary column, marketing materials approved by the Office of Personnel Management led enrollees to believe that their premiums would not rise if they joined the program. In the months since they have learned otherwise, with some now expecting to pay as much as 25 percent more for premiums.

According to his prepared testimony, he will tell lawmakers that the marketing materials did not clearly state the possibility of a rate increase to enrollees who selected the Automatic Compound Inflation Option, or ACI. The option allows enrollees to pay more at a younger age and is designed to keep pace with annual inflation. A brochure that Joy plans to submit for the record mentions only possible premium increases in a section that describes a different payment plan.

According to his prepared remarks, Sen. Daniel K. Akaka (D-Hawaii), chairman of the subcommittee, is expected to say that the long-term care program "should serve as a model for the private sector and state and local governments. Right now, the program is falling short of this goal."

"Red flags have been raised concerning OPM's role as a regulator of this insurance program," according to Sen. Herb Kohl (D-Wis.), chairman of the Aging Committee. "We hope to hear that OPM has a plan for avoiding outrageous rate hikes in the future, and for providing better consumer education to its policyholders."

OPM spokesman Edmund Byrnes said Tuesday, "Given the experience with rate increases under the new contract, we are sensitive to how the message on premium increases is portrayed and have been working closely to ensure enrollees and future enrollees understand exposure to the possibility of future rate increases."

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These are not specifically health cost concerns, they're insurance cost concerns. And the deal some people thought they were making so that others would pay their cost increases. Seems they find a way to get others to pay their costs, and now they're ticked off.
#1 - read the advertising and know what might happen
#2 - reason things out; if costs go up beyond estimates three things can happen: premiums will go up, someone else pays the increase (government? later enrollees?), or the company will fold.
People need to understand what insurance is, not what they want it to be. It's a pool of money where I pay your bills today in the expectation that you'll pay mine tomorrow, all managed by a firm that makes a profit investing that pool of money. Someone pays - who is it be?

I, too signed up for long term insurance when it was first offered, coincidentally when I was about to turn 55. I chose the ACI option, after reading all the literature and talking with agents, since it offered the best protection against premium increases - but it did not rule them out! This will be the first premium increase since the program started in 2001. Not a bad track record. Nothing in life is guaranteed folks. I'm not going to complain.

What's unclear about "lock in a flat rate"? They set the rates and terms; I didn't. The inducement was that, in return for enrolling in the plan at a young age and initially paying higher premiums, the company would have those dollars to invest decades before any actuarial expectation that I would receive any benefit.